Jardine Matheson Holdings Limited (SGX: J36) is a sprawling conglomerate with interests in many Singapore-listed companies such as automobile distributor Jardine Cycle & Carriage Ltd (SGX: C07), bricks-and-mortar retailer Dairy Farm International Holdings Ltd (SGX: D01), hotelier Mandarin Oriental Limited (SGX: M04), and more.
But that’s not at all. Jardine Matheson also has stakes in the London-listed insurer Jardine Lloyd Thompson, and the privately-held Jardine Pacific.
In early March, Jardine Matheson released its 2017 full year earnings update. Given the complexity of the company, I thought it would be useful for investors to have a look at the performance of the individual businesses.
In this article, I will be running through the performance of Jardine Pacific. [Editor’s note: Articles studying the Jardine Motors and Jardine Lloyd Thompson businesses have been published. They can be found here and here.]
What Jardine Pacific does
Jardine Pacific can itself be considered a conglomerate, given that it has a finger in areas such as engineering and construction, airport and transport services, restaurants, and information technology.
The financial performance
The table below shows the underlying profit contributions from Jardine Pacific’s various businesses in 2017 and 2016:
Source: Jardine Matheson 2017 full year earnings presentation
There are a few important points to note. Firstly, most of Jardine Pacific’s businesses experienced growth in their underlying profits (underlying profit excludes one-off items) in 2017. The Gammon business saw a huge jump in profitability due to the absence of provisions for a civil project recorded in 2016.
Secondly, the Transport Services portion saw its underlying profit jump by 52% mainly due to good growth in cargo throughput. The biggest laggard was JTH, which is the IT arm of Jardine Pacific; it reported a 25% decline in profit due to a soft IT market.
Lastly, Jardine Pacific will have management responsibility over Jardine Strategic Holdings Limited’s (SGX:J37) 28% stake in the Hong Kong-listed Greatview Aseptic Packaging Company. Greatview is the second-largest supplier of aseptic carton packaging in China, and the third-largest globally. The 28% stake was purchased by Jardine Strategic in 2017.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore has a recommendation for Dairy Farm International Holdings.